[The following information applies to the questions displayed below.] Turner, Ro

Question

[The following information applies to the questions displayed below.]

Turner, Roth, and Lowe are partners who share income and loss in a 2:3:5 ratio. After lengthy disagreements among the partners and several unprofitable periods, the partners decide to liquidate the partnership. Immediately before liquidation, the partnership balance sheet shows total assets, $159,600; total liabilities, $106,000; Turner, Capital, $5,300; Roth, Capital, $15,400; and Lowe, Capital, $32,900. The cash proceeds from selling the assets were sufficient to repay all but $42,000 to the creditors.

Required:
a. Calculate the loss from selling the assets.
b. Allocate the loss from part a to the partners.
c. Determine how much, if any, each partner should contribute to the partnership to cover any remaining capital deficiency.

Explanation / Answer

Part 1 - Calculation of loss from selling the assets

Part 2 - Allocation of loss from sale of assets between partners

$19120

($95600*2/10)

$28680

($95600*3/10)

$47800

($95600*5/10)

Part -3 Contribution of capital deficiency by each partner

Particulars Amount Liabilities before liquidation $106000 Cash received from selling the assets($106000-$42000) $64000 Remaining Liability towards creditors $42000 Cash received from sale of assets $64000 Book value of assets $159600 Loss from sale of assets $95600

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